Budget 2024 | Extra compliance mechanisms to be introduced for municipalities

Municipalities will be required to produce separate financial statements for each trading service under their care, as the government works to improve the financial health of ailing local governments.

According to the medium-budget policy statement (MTBPS) tabled on Wednesday, a performance-based conditional grant would be introduced to trigger these changes.

This is the latest shift in national government interventions over local government, where service delivery is often the weakest.

Finance minister Enoch Godongwana tabled the first MTBPS under the GNU.

Electricity, water, sanitation and waste management services were in long-term decline due to underinvestment in maintenance, rehabilitation and expansion at a local government level, according to the MTBPS.

“In large cities, these services are supplied through trading services, which have experienced some significant financial decline,” it said.

“Detailed reforms are being rolled out, including a requirement for municipalities to produce separate financial statements for each trading service to make the financial relationship between the services and the municipality explicit.

“In 2025/26, government will create a performance-based conditional grant to trigger these changes. The results are expected to improve the functioning of trading services, which over time will allow for increased investment to supplement grants.”

The private sector has been invited to participate in priority programmes for non-revenue water and wastewater recycling in eThekwini, Tshwane, Nelson Mandela Bay, Buffalo City and Mangaung through performance-based contracts and public-private partnerships.

Since the February budget speech, the government has finalised amendments to public-private partnership guidelines in National Treasury Regulation 16 and Municipal Regulation 309 to ensure better spending outcomes in projects.

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